Title Topics: Foreclosures and Short Sales, What’s The Difference?
Let’s start with the definitions:
Foreclosure is the legal process by which mortgaged properties may be sold to pay off a mortgage loan that is in default. If your loan is in default, it typically means that the borrower is behind on their mortgage payments. In the event of a foreclosure, the mortgage in first lien position will be repaid before any other mortgages.
A short sale is when you sell your home for less than the balance remaining on your mortgage. A short sale is used as an alternative to avoid foreclosure on a home. If the mortgage company agrees to a short sale, the owner can sell their home and pay off all (or a portion of) their mortgage balance with the proceeds from the transaction.
opportunity to rebuild your credit.
That’s versus the two to eight years that you could have to wait if your property went into foreclosure. When making the decision, you should consult with a real estate attorney or your tax advisor for advice and to clearly understand the most current guidelines.
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